Air Canada To Purchase Air Transat

[rudder]

48 minutes ago, boestar said:

I cannot believe that the EU can have any input at all on how private companies are run in Canada.  We are not an EU member and there is plenty of choice from the EU for flights to and from Canada.  Why do we bow down to this crap.

 

You understand how international air authority is granted, right?

[boestar]

11 hours ago, rudder said:

You understand how international air authority is granted, right?

Sure but for a merger of 2 companies there should be international influence.

 

[Turbofan]

So British Airways, Lufthansa and Air France/KLM merge.   Foreign countries that are impacted by the changes in the competitive landscape should stay silent.  Canada for instance should be silent on competition even though our airlines would probably get squashed.

The EU commission has no authority over the merge itself.  They only have authority over anti competitive changes in the industry within their boarders.

[rudder]

International route authority flows from bilateral agreements. The terms of the authority speak to designation of use by local carriers (generally how many carriers not who those carriers will be). The agreements are administered by the respective country or region. The volume of frequency is often specified in the agreement.

Each signing authority reserves the right to monitor the use of the route authority so as to prevent imbalanced or anticompetitive behaviour. A good example is Canada refusing to grant Emirates increased weekly frequency on the DXB-YYZ city pair suggesting that the subsidized nature of Emirates would result in anticompetitive pricing on too many seats.

The European Commission is undertaking the same form of analysis about concentration of inventory under a single entity and the potential impact on pricing as TC is conducting using the CTA and the Competition Bureau.

This is not about approving or rejecting a corporate merger or acquisition. It is about the impact on competition and whether there should be a condition or remedy required regarding frequency or modification of designated authority on a route or routes.

 

 

 

 

[Airband]

Quote

Transat Shares Sink to 8-Year Low as Takeover Odds Suffer

By Michael Bellusci
September 22, 2020- Bloomberg News

Transat AT Inc., hit hard by the coronavirus pandemic, dropped to an eight-year low as investors bet against a travel recovery and the completion of a takeover by Air Canada.

Shares of Montreal-based Transat have slumped every trading day this month except one. The stock’s 13-session losing streak is its longest since 2008.

Transat has lost about C$475 million ($357 million) in market value this year because of rising odds that a proposed takeover by Air Canada at C$18 a share will fall apart. The deal was struck in August 2019, but has yet to be approved by competition authorities.

Transat is looking for new sources of financing, but it “may require Air Canada’s prior consent” to raise money because of clauses in the takeover agreement, the company said Sept. 10.

Canada and the U.S. recently extended an agreement to restrict travel between the two countries until Oct. 21, and the Canadian government continues to advise residents against non-essential travel outside the country.

Passengers coming into Canada must quarantine for 14 days, though Transport Minister Marc Garneau said last week the government may loosen that restriction.

 

[Specs]

Quote

Transat is looking for new sources of financing, but it “may require Air Canada’s prior consent” to raise money because of clauses in the takeover agreement, the company said Sept. 10.

Good luck with that in this COVID environment. 

[Turbofan]

Yesterday was the outside date Transat has published on their website.  What’s up?  Nothing so far from AC or Transat.

Or have I missed something?  Likely

[j.k.]

5 hours ago, Turbofan said:

Yesterday was the outside date Transat has published on their website.  What’s up?  Nothing so far from AC or Transat.

Or have I missed something?  Likely

Without any announcement I think it means they are negotiating. 

I suspect the original deal is gone in Air Canada's eyes and Transat is arguing it can continue extension. 

[Kip Powick]

3 minutes ago, j.k. said:

Without any announcement I think it means they are negotiating. 

I suspect the original deal is gone in Air Canada's eyes and Transat is arguing it can continue extension. 

 

I have a feeling my AT voucher for the one week of vacation I lost is going to end up as a big fat ZERO....

[chaster]

Fake news !The deadline is December 27

19 hours ago, Turbofan said:

Yesterday was the outside date Transat has published on their website.  What’s up?  Nothing so far from AC or Transat.

Or have I missed something?  Likely

Fake News!The deadline is December 27!

[rudder]

37 minutes ago, chaster said:

Fake news !The deadline is December 27

Fake News!The deadline is December 27!

See page 15/16 - Outside Date. Notice would have been given at least 5 business days prior to Sept 27 assuming requisite conditions were met.

There is no public evidence that notice was given. Transat.com Investor Site still identifies the Outside Date as Sept 27.

https://www.transat.com/getmedia/b39fdc41-b046-403b-9f6c-b07c48aee3b9/2019-Transat-A-T-Inc-Arrangement-Agreement-(SEDAR)_1.pdf.aspx

[Airband]

2 hours ago, rudder said:

There is no public evidence that notice was given. Transat.com Investor Site still identifies the Outside Date as Sept 27.

 

 From Q3 MD&A, appears deadline can be extended up to Dec 27 2020 by one party or other giving notice. Is public notification a requirement? There doesn't appear to be one specific to the initial extension from June to Sept.

Quote

If the required approvals are obtained and the conditions are met, it is now expected that the arrangement will be completed during the fourth quarter of the 2020 calendar year. Under the arrangement agreement, the deadline for obtaining the regulatory approvals cannot be extended beyond December 27, 2020. This date, initially set for June 27, 2020, may be deferred, to the extent that the regulatory approvals are not obtained, for three one-month periods upon notification by one of the parties, and subsequently for three additional one-month periods under certain conditions. The Corporation has successively informed Air Canada of its decision to activate the first three initial one-month periods, which defers, for now, the June 27 deadline to September 27, 2020.

 

[rudder]

21 minutes ago, Airband said:

 

 From Q3 MD&A, appears deadline can be extended up to Dec 27 2020 by one party or other giving notice. Is public notification a requirement? There doesn't appear to be one specific to the initial extension from June to Sept.

 

So, 2 publicly traded companies - one of whom has extended the Outside Date 3 times AND publicly announced such extensions - are 8 days past the notice deadline for a (potential) further 30 day extension without any public notice and you think they just decided not to disclose that extension to their shareholders?

More likely it is as j.k. said above - parties are negotiating. Could be negotiating the applicability of the $40MM break fee or could be negotiating a replacement deal.

Either way, the silence speaks volumes.

[Turbofan]

Airband,

Every other extension was announced by Transat and the date placed on their investor relations page.  
 

You will note that the extensions beyond Sept 27 to Dec 27 is under certain conditions.

And all of a sudden the date passes without an announcement or a change to the outside date on the investor relations page.

 I suspect J.K above is on the mark.

Edit.

 

Rudder beat me to it.

[Airband]

21 minutes ago, rudder said:

and you think they just decided not to disclose that extension to their shareholders?

Jeezus guy, just asked a question. Was looking for information, not a scrap.

[Airband]

2 hours ago, Turbofan said:

And all of a sudden the date passes without an announcement or a change to the outside date on the investor relations page.

They stated in their Sep/20 Investor Presentation that the transaction outside date was Dec27/20.

 

[Turbofan]

Airband,

I don’t think Transat has the ability to unilaterally extend beyond Sept 27.  I think extensions now need to be agreed on by both sides and have unspecified conditions attached. I think that is why your screen shot has the two dates separated within the same bubble.
 

Notice I wrote “I think” twice.  I am asking just like you are.  I am completely open to miss reading the tea leaves.  I am reading the tea leaves from the vantage point that the Sept 27 deadline may have been the first opportunity to legally leverage alterations if AC was inclined.  I acknowledge I could be completely off base.  That there is something I missed.
 

Why has an extension beyond Sept 27 not been announced?  Why does the outside date on the Transat website still say September?  Why haven’t we heard from AC since this is the first non unilateral extension?  Both companies have a fiduciary obligation to inform. Why haven’t they?
 

hypothesis:  they are talking.

[rudder]

Transat website now says Outside Date extended to October 27th.

https://www.transat.com/en-CA/corporate/investors?ici=TRZ-footerlink&icn=TRZ-investors

[Maverick]

The deal is dead. Transat will be the first in Canada to officially disappear. 
AC can not be held to a deal like this in these Covid times. 
 

[rudder]

7 hours ago, Maverick said:

The deal is dead. Transat will be the first in Canada to officially disappear. 
AC can not be held to a deal like this in these Covid times. 
 

I don’t believe that Transat will disappear.

But I do believe that TRZ and SWG as vertically integrated tour companies will have to revisit the business model in order to survive through the COVID depressed travel period which could last well in to 2021, if not longer. Nobody is filling airplanes these days, so using dedicated lift to meet packaged vacation demand will be problematic. SWG is already adapting.